Conford, Freund and Kilkenny. The opinion of the court was delivered by Kilkenny, J.A.D.
The State Division of Tax Appeals ordered the cancellation of property tax assessments for the years 1957 and 1958 levied by the City of Trenton against 29 properties owned by Rider College and located in that city. In doing so, the State Division upheld the college's contention that it was entitled to tax exemption under N.J.S.A. 54:4-3.6, which provides, inter alia , tax exemption in favor of:
"* * * all buildings actually used for colleges , schools, academies or seminaries; provided, * * * the buildings or the lands upon which they stand, or the associations, corporations, or institutions using and occupying them as aforesaid are not conducted for profit." (Emphasis supplied)
On the city's appeal from the judgments of the State Division, the issue is whether Rider College was as of the
assessing dates for the tax years 1957 and 1958 an institution "not conducted for profit."
Rider College had made previous applications for the same tax relief on the same ground, but had been unsuccessful. In connection with its appeal from a 1940 tax assessment, the Supreme Court ruled adversely to it and the Court of Errors and Appeals affirmed on the opinion below. The Supreme Court found that the proofs were not "free from doubt," and that the college had failed to carry the burden of proof imposed by law that it was a "fundamentally charitable institution" not for profit. City of Trenton v. State Board of Tax Appeals , 127 N.J.L. 105 (1941), affirmed City of Trenton v. Rider College , 128 N.J.L. 320 (E. & A. 1942). Our present Supreme Court, in the case of The Kimberly School v. Town of Montclair , 2 N.J. 28, 39 (1949), succinctly stated the reason for that earlier Rider College decision, when it said:
"[It] bore the obvious brand of an essentially commercial undertaking, with an accumulated surplus between $140,000 and $165,000, and a net income of $17,000 for the tax year in question after the payment of substantial salaries to its managing and teaching staff and to seven 'salesmen' as well as the expenditure of $18,000 for other advertising."
Rider College next sought tax exemption as to the 1953 assessment and after a denial by the Mercer County Board of Taxation, which action was affirmed by the State Division, it appealed to the Appellate Division. In that new appeal, it relied on certain changes in its corporate structure and method of operation, which it had made to overcome its earlier characterization as a commercial undertaking.
The college had been founded in 1865 and incorporated in 1897 under the general enabling act of 1890. From 1901 to 1934 it was operated as a private proprietary educational institution by the shareholders, Moore and Gill, who were also, respectively president and dean. It continued to be so operated, after their deaths in 1934, until 1941,
by their sons, who took the positions, respectively, of president and vice-president. Following the death of the elders, Moore and Gill, their interests were sold by their estates to the corporation for $98,000 cash. In 1942, after the above adverse decision, the college reincorporated under the provisions of Title 15, "Corporations and Associations Not for Profit," and it has operated under this non-profit charter ever since. The old board of governors was supplanted by a board of trustees. No stock, of course, is issuable or was issued under the new non-profit corporate set-up. The juniors, Moore and Gill, retained their former positions.
The Appellate Division, in this second case, Rider College v. State Division of Tax Appeals , Docket A-461-54, in an opinion filed February 17, 1956, not officially reported, after noting the changes made by the college, concluded that the school had been operated substantially in the same manner since the earlier decision as it had been operated prior to that decision. The endowment fund, referred to as amounting to between $140,000 and $165,000 in 1939, had increased to $1,503,440.09 on August 15, 1953. This was due largely to an excess of receipts over expenditures during the 15 years in question. The actual value of the assets of the college as of the same date was $2,156,351.88. From the standpoint of salary and control, no substantial change had been made between the 1940 case and the assessing date applicable to the 1953 case. "Vocational advisers," denominated by the Supreme Court as "salesmen," drawing substantial salaries, continued to perform the same services of soliciting admissions to the college. And so with other details of management and operation, the same substantial pattern persisted despite the ostensible change to a "non profit" organization. Accordingly, the claim of tax exemption was again denied.
It is clear that those earlier adverse decisions do not per se preclude Rider College from applying again for tax exemption as to the 1957 and 1958 levies. But it is also true that the burden of proving its tax-exempt status is upon the college, and that when the right to relief is not clear,
exemption is to be denied. Princeton Country Day School v. State Board of Tax Appeals , 113 N.J.L. 515 (Sup. Ct. 1934); Jamouneau v. Division of Tax Appeals , 2 N.J. 325 (1949). If the facts presented on the present appeal were substantially the same as those found in the 1953 tax case, there would be no justification for disturbing that sound determination on the facts then adduced. For that decision was bottomed upon the test of tax exemption laid ...